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Bankruptcy law changes on the way

Changes to bankruptcy legislation that have been put up for consultation provide for banks to be able to initiate and have the final say on the streamlining of an enterprise, ranging from the restructuring or capitalization of its debts to the company’s sale to a third party.

The Justice Ministry is set to change the Bankruptcy Code considerably with the aim of modernizing the framework for overindebted enterprises so as to assist in their streamlining and cut down on nonperforming corporate loans from banks that currently total 65 billion euros.

The two key changes to be introduced are the banks’ capacity to submit a streamlining application for the overindebted company without the debtor’s consent, and the shortening of the entire process to just one stage.

Banks can submit a streamlining application and approve the deal provided they have the consent of 60 percent of the company’s creditors, and the court will approve it within four months, provided the company can be rendered sustainable.